Nanotech Investors Play the Later Rounds
Many of those investments were oversubscribed, so potential investors had to be turned away. So what's the difference between them and other start-ups starving for venture money? Simple: They are making and selling stuff.
"These venture capitalists are only looking at nanotech companies that are making real money," says Barry Weinbaum, CEO of NanoOpto, whose components are found in telecom equipment and in consumer electronics such as cell phones and DVD players. "These are companies that have the technology risk behind them. They're manufacturing products with customers behind them."
NanoOpto's third round of investments in March came more than four years after its initial funding. Unlike the first two rounds of investments, when Weinbaum needed to coax money from VCs without the lineup of customers it has today, NanoOpto was turning away investors in its latest round.
"The companies that are surviving are showing a degree of diversification," Weinbaum says, as NanoOpto branched out of its initial telecom focus into consumer electronics.For venture capitalists, risk is as commonplace as oxygen -- and just as vital for their success. The risks of companies using nanotechnology are twofold: Will the technology pan out and will it sell profitably? If this first generation of nanotech start-ups is indeed coming of age, that means, yes, the technology has been turned into a product that others may buy. The trick now is to get more people buying it. The $155 million invested in nanotech start-ups is only 3% of the $4.6 billion in venture financings in the first quarter, giving life to the cliche that VCs are falling over themselves to invest in nanotech. While the later-stage investments in companies like Nantero and NanoOpto suggest that some early nanotechnologies are hitting the marketplace, many VCs remain cautious.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV